tv Bloomberg Markets Americas Bloomberg December 21, 2016 10:00am-11:01am EST
." julie: we are going to take you from new york to london to madrid in the next hour. of course, we are monitoring for breaking news. november existing home sales million, and one that is a month over month gain of .7%, better than estimated. 5.5 million was the average economist estimated existing home sales the largest portion of the u.s. housing market, coming in a little better than estimated. also, by the way, that level is the highest since early 2007. perhaps people getting in notes of home closings ahead of the further increase in interest rates. 18.2% before the seasonal adjustment from november 2015.
these existing home sales looking pretty strong. we are 30 minutes into the trading day in the u.s. abigail doolittle has the details. no 20,000 today. abigail: at least yet. it seems the existing home sales are not helping the three major averages yet. small declines for the doubt, dow, s&p 500, and the nasdaq. julie was talking about the possibility of dow 20,000. we are than 50 points away. vix is trading at levels last seen, if we were to close at these levels -- more than two years ago, july 2014. the fear gauge continues to go lower even today as you have the major averages slightly lower we go to bloomberg and look at the imap function. we see lots of red, not surprisingly, helping to explain the small decline for the s&p
500. the worst performing sectors are the financials and the weakness for the big banks -- bank of america, citigroup, jpmorgan. upgrade at atlantic equities for citigroup and bank of america to overweight. an analyst at their saying he expects the recent momentum -- the sector is up 18% since the election -- to continue into the new year on expectation of rising rates. perhaps weighing today, choppy trading. yields down ever so slightly. as for the commodity complex, very interesting movement. we'll trading slightly higher. look at natural gas, up 6%. theooks like behind this is possibility that stockpiles are less than what investors are looking for. this is helping southwestern energy company's a big energy. finally, just to round it out, risk off, risk on. there is a slightly risk-off
sense here. , 10 year yield down ever so slightly. and gold ever so slightly higher. mark, not at now, clear directional trading for the financial markets in the u.s. pretty much mixed. dow hitting the height of the year yesterday for the stoxx 600, banks is the big story. i'm going to get to it. this is the spanish benchmark stock index. mrr is the function could look at the bottom of your screen. these are the big decliners. spanish lenders -- they may have to give back billions of euros to mortgage customers after a ruling by top court arborist to pay to much interest on home loans, predating on may 2013 spanish ruling on so-called mortgage flaws, entitled to a refund from the banks are core set of proposed time limits on the refunds.
customers shouldn't be bound by such unfair terms. the second-worst performer is down by 2%. it was 7.5% lower earlier. 35 banks index fell as much as 2.1%, the most since august. not as low as it was earlier. monti passkey, we can't get away from it. record lows today. ,hares falling as much as 19% amid mounting concern it will fail in its efforts to raise 5 billion euros of fresh capital from money managers and individuals. also, it said liquidity may turned negative. the italian government winning the support of parliament to boost public debt by up to 20 billion euros as it looks like it is preparing for a likely rescue of troubled lenders. on the issue of debt, 2.2 trillion euros at the end of
october, public debt is the euro region's largest in absolute terms. when you take it as a percentage of gdp, it is second to only greece's. a growing debt to gdp ratio make it harder for germany to put its economy on the path to study increase in 2017. this chart compares actual debt to gdp, which is the white line, versus the italian government forecast, the blue line. is purple line, 133.8%, post-bank rescues. gdp -- growing jet to debt to gdp ratio is something investors are going to be keeping a close eye on, julie. julie: they are, and we will be taking a look at that in a few moments. let's look at "first word" news.
alisa parenti has more from the newsroom. the latest high-profile finance figure to face jail, he pleaded guilty to two counts of insider trading last month. he ran funds including the blackrock u.k. dynamic fund and the blackrock u.k. absolute alpha fund, once overseeing as much as $2.5 billion. in germany, manhunt is underway at this hour. authorities are said to be looking for a tunisian man who is wanted in the truck attack that killed 12 people and wounded dozens at a berlin christmas market. german media can without identifying their sources, reported the unidentified suspect documents were found inside the truck, and "the washington post" citing a senior official says he is an asylum seeker. but the german interior minister will not confirm nor deny details published in german media. authorities in mexico have not yet said what may have caused an
explosion at a fireworks market that killed at least 29 people and injured another 72. the market was bustling with shoppers went the powerful chain reaction explosion ripped through its stalls. some of the injured have been burned over 90% of their bodies. syrian tv says aleppo evacuations have resumed, allowing rebels to begin final withdrawal from the war-ravaged city. opposition forces agreed to surrender the last foothold in the city to the government last week that the dispute delayed the final round of evacuations for some 20,000 civilians and fighters to be bust out of the war-torn city. top courtan union's ruled against britain in its first major judgment of the brexit era. it said u.k. measures forcing telecommunications companies to keep hold of customer data for a laws.iolates the bloc's the suit will come back to the european court of appeals -- the
court of appeals for final ruling. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i'm alisa parenti. this is bloomberg. mark: thanks. let's get to our team coverage of europe's troubled banks. shares of spanish banks tumbling today after the eu court ruled that lenders may have to get back billions of euros to mortgage customers. struggles continued in the italian banking sector. let's begin in spain, charles. what exactly did the court decide today? charles: the court decided that spanish bank have been charging spanish mortgage holders too much money for too long. that, in a nutshell, is it. it struck down the spanish argument that claims could only go back to 2013 and said they could be fully retroactive. mark: how well prepared, charles, is the spanish banking
?ector for this a number have taken provisions. not every bank is affected by this ruling. charles: spanish banks have made some preparation for this. but it is another blow. it is another bill that the banks will kind of have to pay. they are already dealing with ultralow interest rates, we command for credit. it is another piece of bad news for these banks to not all banks are affected. the biggest bank says it is not really affected at all by the situation. julie: charles, do we know executive, or are there any estimates come on how big the bill will be? does itback as it go?-- go? charles: i guess it goes back to the start of the life of the mortgage is affected. the bank of spain has come out today and given a number.
it says the ruling today from the eu's cap courts fx just over over 4 billion euros of mortgage flaws. that gives some size and scope there. we heard the second-biggest bank here come out and say it will make provisions -- take a charge of about 400 million euros to cover future claims related to this issue. julie: and just to put it in perspective as we talk a lot about the italian banking paschi, put it in perspective for us, the spanish banking system, the health of the spanish banks, as something like this hits, versus what we are city -- seeing in italy. charles: it is a good question. undertook a pretty intensive cleanup of its banking system from 2012, and i think most people would say that that has removed a lot of the -- well, it has removed doubts about the
systemic solvency of the spanish banks. it was a very big and significant cleanup. and i suppose some spanish commentators would say the times should have done that a long time ago. that would be -- the italian's have been that long time ago. that would be the spanish view. there are some spanish banks that are in better shape or worse shape than others. the one that many people refer to, involved also to some extent the one's -- is undertaking a big real estate cleanup of the moment, a hangover from the spanish building crash. mark: charles, thanks a lot. charles penty in madrid. julie: i want to turn to italy, where shares of monte dei paschi plunged to a record low amid mounting concerns it will fail in its efforts to raise white billion euros of profits -- 5 billion euros of private sector funds. john, we have been talking about this for weeks now, monte dei paschi's efforts to get this
funding plan to work. it doesn't seem like it is a huge surprise, right, that it has not been successful. >> yes, well, with the benefit of hindsight, it was a very ambitious five-billion-euro target. it is not looking good so far because the qatar sovereign finally, supposedly the anchor investor, has not committed yet. swat has raised 500 million since tuesday. that expires today. and so, basically, it is not looking good. we may find out already this evening what the prospects are. julie: we have been talking pretty regularly about what the time government was doing. what is the latest on that? what are the latest steps here? john: to the credit of the new prime minister come he is moving much faster than his predecessor, matteo renzi, did.
he is given as hot potato, less than two weeks on the job. today he had the approval of parliament for boosting the total of italy's debt by up to 20 billion euros, and the plan is to use at least some of those begun on possibly friday or earlier with a cabinet meeting which would deal first and aschi three cap plan fails. mark: we it step in, the government, for monte paschi, or other trouble letters in italy? -- troubled lenders in italy? john: right, well, the finance minister, who stayed on the job, hi tightlipped about what pasc might give it what officials are saying privately is that this will first and foremost deal with monte paschi,, but yes, the potential beneficiaries, there are no shortage of troubled
lenders. there are several other banks which would either benefit on friday itself or possibly soon afterwards. mark: john, what about this liquidity concerns surrounding monte paschi? is that why the shares sank as much as 19% today? is liquidity running out quicker than previously estimated? john: we think that is a factor. the key thing is the markets are watching the general recap plan and how that is going to turn out. that the shares did recover a bit after parliament approved -- gave permission to the government to act and to boost debt by up to 20 billion euros. i think, obviously, we are mainly watching how the plan turns out. all right, thank you so much. reporting from rome there. mark: coming up, going to continue the discussion on european banks with chris
julie: live from london and new york, i am julie hyman. mark: i am mark barton. this is "bloomberg markets" on bloomberg television. bad, bad day for european banks. joining me to shout all about it is chris jeffery, strategist at elgin and which has more than $1 trillion in assets under management. thanks for joining us today. the italian parliament today on publice motion debt for 20 billion euros.
bloomberg is running a story saying that italian banks have the 52-billion euro whole and the balance sheets. how much for capital do you believe italian banks need? chris: we think the 52 billion number is a little on the high side but not wildly inaccurate. what does it mean for a time gdp? %.number on the order of 2-3 this is not an insurmountable amount of money on the national level. in spain it was roughly twice as big. this has been a frustrating thing thinking about the italian banking issue, the amount of money from the time government -- mark: navigating it is the biggest -- once again, the eu standing in the way of resolving the banking issue that has been prevalent since the crisis. gordianxactly, the
knot. these are rules for good reason. you want investors and banks, both equity investors and credit investors, to have to pay when banks fail. but actually implementing those directives is very difficult because of the very well-known political challenges associated. julie: so, chris, do you think in the end the solutions will be implemented? and what would be your degree of certainty? would you be buying a time banks at this point? -- italian banks at this point? chris: we think in the end of this will get put through because the amount of money is not that big from the italian government's perspective, and certainly not that big from the european governments in aggregate perspective. but that takes is hard to know and it is a lot, whether you think italian bank entities is a good investment or debt is a good investment. the clearer point we would make
his we do not think this is each will become of the systemic importance to the european system. aggregate ats in sea asset prices rallied 50% the last six months. that is the big picture here. it is not the trials and tribulations of the italian bank bailout or the spanish conduct issues. the big picture here is investors are a lot more confident in european banks today than they were six months ago. why is that? profitability has improved. i guess reason number one. reason number two's european growth looks stronger than it did six months ago. 2 thingsas those remain in place, we struggle our dwarfs -- to see how whitmore's -- to see how it morphs into something more scary. julie: when you look to europe to broaden it out, optimism more broadly, do you think that
pockets of populism we have been into somethingph that creates more of a risk for investors at this point, what do you think it has been contained? chris: no, absolutely, you have put your finger on the button on the number one risk that investors need to be thinking of the next few months. anybody who tells you they can be confident of an electoral outcome has not been paying attention during the course of 2016. in 2017, we have the french election on the slate, the german election. all of these things are --blematic and they are not and they are problematic because politics is the one thing that the ecb cannot fix. the ecb can do nothing about a vote that decisively rejects the european union or the euro zone. they can do a lot to heal liquidity problems in the system, but they cannot change the political dynamic. that is why i think of populism issue, the risk around the public vote, is an acute one and
is going to keep me awake at night. mark: why is it reflected in equity volatility gauges? i will do a battle of the charts, chris. volatility, fxlity, volatility, which has been on the rise. equity volatility is measured by the vix. stocks are down to levels in europe we have not seen for a couple of years. do you expect equity volatility to reflect the rising political concerns we are going to see in 2017? chris: that's a really, really good question. we havegot to ask why not seen this pickup in the price people are willing to pay for insurance on financial assets. the reason so far as every dip we have seen is a buying opportunity largely because central banks, in an double down on stimulus. we have seen that repeatedly over the last two or three years -- ecb, bank of japan, bank of england, federal reserve. i think we need to be careful
about going into 2017 the story is not clear anymore. the federal reserve is tightening policy. they are training slowly, but they are training. we think -- tightening slowly, but they are tightening. it would be a surprise to us of the bank of england were to extend its qe program. the euro zone is on a clear glide path to stopping. protection hasnk been the big reason why equity volatility has been so contained. the draghi put. carney put. there is a lot of puts out there that have been applied. the don't bank on that going forward as we move to tight spots. mark: chris jeffery, strategist at lgim. stay with us. you are watching bloomberg. ♪
mark: this is "bloomberg markets ." i am mark barton in london. julie: i'm julie hyman in new york. what is going on over there? mark: a little lower today. all about the banks. we focused big-time on the banks' view the last 25 minutes. spanish banks may have to give back billions of euros to mortgage customers after a ruling by the eu's top corporate a look at currencies today. the euro against the dollar yesterday was lower since the beginning of 2003. and have a look at the bond markets today, as we approach the european equity close. this is bloomberg. ♪
it was higher but now flirting with the unchanged level at the moment. libyand pull between getting its oil fields back online and these weekly inventories here in the united states. just getting the numbers now and it looks like there is an unexpected build in the weekly inventories. i could be bad news -- that could be bad news for oil prices. you see that in the trades following here. 2.2 -- 2.20 6 million barrels was the weekly increase in inventories. a drop was projected. a drop was reported by industry groups. we have a drop in oklahoma of 235,000 barrels. that may indicate that find someone. you have the decline in gasoline and in the distal inventories. 1.0nery utilization at presented all that may mitigate the decline we were seeing in oil prices in the wake of the
inventory numbers. people have also been watching the differential very closely between overall inventory number and the cushing numbers. the fact that there was a coaching drawdown may be a bit of a cushioning effect -- cus hing, cushioning, you like that? -- in the drop in oil prices. mark: julie, great stuff. earlier on bloomberg we heard from the fx strategist at credit agricole. he discussed ways to take risk out of currency holdings and the need to price in populism. >> in our opinion, that means positioning long dollars, oh have to be selective against which currencies. we went to the initial stages of the dollar rally, kind of a risk-on rally with rising u.s. yields could we think it makes sense for investors to position more defensively. against ther australian dollar. all those underperforming the
risk-off environment. --think investors could be [indiscernible] bloomberg.cosaw this last year. >> equities -- everyone is staring down dow 20k. tom keene said it 20 times earlier. he is really excited about it happening. fixed income guys say -- look at the merrill lynch survey. we can bring it to you in this chart. populism, one of the biggest concerns for high-grade credit to about, 2017, up 30%, up from 9% in october. the irony, the contradiction come's populism has taken equity markets to an all-time high community high-grade guys are worried. what you make of that? vassili: it has been a difficult factor to incorporate into foreign exchange markets. the repercussions of the
election outcomes were different from what we expected, including the u.s. presidential election. if anything, we are seeing a bit more optimism. if anything, we're seeing some kind of revival of the expectations thereof. of december, the ones that came out, it seems like sentiment is picking up a little bit. you have a contradiction between, on the one hand, yes, populism as something that markets typically don't like. but on the other hand, in terms of what transpired recently, it hasn't been all that bad. we do agree that next year, especially with french presidential elections, you have to incorporate into your forecast. david: and when you talk about populism, you have to talk about europe. what does that say about the euro? tricky because the euro has tended to trade well in risk-off environments. european investors can to
repatriate. probably being short euro-dollar is not absolute best way to position for european political risk. i think you would probably be better off in a more straightforward risk-off trade -- like i said, long treasurys for short emerging-- or short emerging currencies. that is why people like selling the asian currencies when chinese currency's -- chinese currency. it gives you a strong dollar story but a little bit of potential risk-off. jon: in a traditional sense from you start thinking about the euro the way you thought about the yen the left several against. i wonder if swiss is the way to trade for 2017. vassili: it could be a protective trade. theously, ever since we had big drop on the floor and the move in the swiss franc, the
size of the market hasn't been quite there. some of the peripheral european currencies are adjusting -- interesting. jon: yesterday, treasury futures, 30% of the 30 day average. everyone is on vacation. vassili: look, it happens every year. reason to beer more defensive in your position. liquidity tends to spin out, you have choppy moves. look at the dollar-yen the last few days. we have had headlines that are not particularly reliable. that is why rotating from long dollar-yen makes sense for us. fxk: the credit agricole strategists. word"check in on " first news. alisa parenti has more. abigail -- alisa: a german security official says the tunisian
aspect in the attack had been potential threat. the security agencies exchange information on the suspect as recently as november. cnn is reporting the man has been arrested in august with forged documents but was released. 12 people died in monday's attack and dozens wounded. an asylum request by the suspect is said to have been rejected in july. a spokesman for russian president vladimir putin is suggesting that moscow doesn't believe the man who killed russia's ambassador to turkey acted on his own. when he refused to offer theories behind the assassination. andre karlov was killed monday in front of stunned onlookers at a photo exhibition in ankara. a team ofrussia flew 18 investigators and foreign ministry officials to turkey to take part in the probe. they plan to return home with karlov's body and his family. ypse is forcingl
tens of thousands of people to flee the country. beijing and dozens of other cities in china are under a red alert for a fifth straight day. the heavies markets closed airports, schools, and wrote -- the heavy smog has closed airports, schools, and roads. the yuan will start easing sanctions -- u.n. will start easing sanctions on pressure over ukraine. as apresident donald trump he wants to mend ties with russia. she met with vice president elect mike pence yesterday. nebraskasays cattleman and the idaho governor are also in the running. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i'm alisa parenti.
this is bloomberg. mark: thanks. bloomberg, as 2017 bridges, investors, economists, and policymakers are starting to look at what goes right with the global economy rather than just fretting about the things that might go wrong. we will look at how investors are shaking off the blues. this is bloomberg. ♪
julie: you are watching bloomberg. i am julie hyman. mark: i am mark barton. this is your global business reported. spain's economy is showing signs of momentum but look at what is driving growth in the country. julie: coca-cola is trying to separate itself from ab inbev in africa. mark: at the historical look at
syria's civil war. how did it start, and where is it headed now? spain's economy probably maintained its path supported by resilience in internal demand and intense job creation. that is according to the country's central bank, which estimates gdp will show an increase in output of .7% in the fourth quarter, unchanged from the prior three-month period. julie: the elian's chief economic advisor mohamed el-erian says sustaining the trump rally is not just about domestic policy. he says the u.s. has a better chance of enduring if trump can coax other nations to embrace reforms. he cautioned against overlooking the front to global markets. mark: coca-cola acquiring anheuser-busch inbev's stake in coca-cola beverages in africa. aba-cola will also buy
inbev's interest in central africa and central american nations. coca-cola is planning to hold those territories until they can be read franchise to other parts. julie: time for the "quick take," where we provide context and background on issues of interest. say they have reached an agreement with the government to complete their withdrawal from aleppo. the surrender of the city is the most significant victory for president bashar al-assad since the uprising swept the country in 2011. he was a look at how the war unfolded, the players involved, and where the conflict is headed. half a decade of an enraptured violence. 450,000 deaths. at least 11 million people displaced from their homes. that is like the entire state of ohio. even as the syrian government recaptures aleppo, serious commercial capital, there is no end in sight. here's the situation. witee 1966, the ala
minority, an offshoot of shiite islam, has been in power in syria, despite the fact that they represent 12% of the syrian opposition. current president bashar al-assad, an alawite, took over in 2000 after the death of his father. cut to 2011 and the arab spring. the world watched as uprisings in tunisia and egypt toppled their respective dictators. syrians took to the streets to protest the oppressive rule of bashar al-assad. instead of stepping down, assad crushed the peaceful uprising with tanks and gunships. many protesters responded by arming themselves. that is when the conflict took on a sectarian nature. sunnis from other parts of the middle east, like the saudis, through backing behind the rebels. shiites, like the iranians, gave their support to the regime. the jihadists of the islamic state attacked both sides.
then there are superpowers like the u.s. and russia, who are frequently at odds over the war. some liquid, the u.s. is against assad, russia supports him. russia used its un security council veto repeatedly to protect the regime. both countries are actively fighting against the islamic state and the al qaeda spinoff in the name of combating terrorism. --ssure uses terrorism tag pressure uses the terrorism type two bomb other groups. in december, the biggest victory against rebels in the six years of the civil war. syrians were able to escape the bloodshed by fleeing by millions into neighboring countries, straining resources and creating a global humanitarian refugee crisis. here is the argument -- russia says it wants to keep syria sovereign and independent by backing assad that for years, the u.s. has insisted assad must go.
presidency,trump's the stance may soften further. he suggested partnering with russia to combat the islamic state should take president over supporting rebels. julie: you can read more about syria and all of our "quicktakes" on of the bloomberg. head to bloomberg.com for more stories. mark: as we get ready to say goodbye to 2016, we may be saying goodbye to irrational despond and secret investors, economists, and policymakers are focusing on all things that could go right with the global economy rather than focusing on what could go wrong. joining us with what is fueling the optimism is rich miller in washington. saying goodbye to irrational despondency, are we saying hello to the old favorite to irrational exuberance? rich: some people looking at the
markets may say we are getting a whiff of this, but irrational exuberance was the old favorite back in thenspan 1990's. earlier in the year, we had this irrational this privacy -- irrational despond and see -- irrational despondency. the secular stagflation church, some crisis was over our head. now people are starting to see the risks more balanced. there are upside risks as well as downside risks. you are seeing that in the markets. maybe some of the markets at the moment have gotten ahead of themselves, according to some economists. mark: that is a good point, because the economists have yet to raise projections as much as is perfected in the exuberance -- reflected in the exuberance in the markets. ith: economists have nudged for nextle of 10ths
year and year after. where they have also changed is where before they used to give you a forecast and say, yeah, there are risks that the forecast is going to fall like jpmorgan is saying there are more risks that the forecast will be exceeded. that is the shift among economists. and then there is this thing that economists talk about called animal spirits. they don't have a handle on it, but oftentimes that is what you are seeing in the stock market and maybe you will see that in corporate suites as well. h, there was also a story on bloomberg the cut eye talking about equity strategist in the u.s. also raising targets. when you have this sort of groupthink, whether it is irrational despond and see -- were exuberance, what could go wrong with that
kind of trend where everybody is going in the same direction? rich: there is always a risk when everybody goes to one side of the boat and you are more at risk to cap size could don't forget, the first part of the thing, it is irrational. if people are moving to one side of the boat and there are rational reasons for expecting that, maybe because the wave will lift us or something, then maybe it is less to worry about. there are a lot of people expecting a lot of things from the top administration -- trump administration, very business friendly policies on tax cuts, deregulation. it will take longer than the markets are pricing in to come about. we will see. julie: i will pull out another old market chessmen to introduce the next story you wrote for bloomberg news, which is past
performance is no guarantee of future results. you wrote a story pointing out that we have seen u.s. markets perform better, and the economy perform better, under democrats than under republicans. what kind of lesson should president-elect donald trump draw from that? rich: it is one of those frightening factoids for him. every gop leader since world war ii has presided over a recession. the same cannot be said for democrats. the economy was recession-free during the 1960's when lbj was in charge and recession free during the 1990's when bill clinton was in charge. it is hard to know -- bad luck sometimes. but it is one of those factoids that you got to give donald trump little cause for p ause. mark: is there a risk that one
might overestimate the ability of presidents to cause or prevent recessions? rich: yeah, that is a really good point. arguably the fed has a lot more to say with its up-and-down moves on interest rates and the up-and-down moves of the economy. the president is hampered -- he has to get an agreement from congress. there is just so much he can do on ms. zone -- on his own. some people say that there is a risk that trump could come if he starts a trade war with china, for example, you might have the gop curse of recession bear fruit. mark: yeah, and on china, coming back to the original topic, irrational despondency, in your piece you say that things are looking better for europe as we come to the end of the year. things are looking better for japan. but china, as we approach the new year, you remember what
happened at the beginning of last year. is there a risk that deja vu will come into play? rich: that is a good point. that was one of the seminal moments, arguably come of irrational despondency, when you had the china moves on the currency earlier this year. i guess there seems to be a china, ateling that least for the short run, has enough firepower, enough policy levers it can pull to keep the economy more or less calm until congress later in the year. they don't want to upset the boat. i guess the feeling is at least for the moment they will be able a lot of the potential bubbles, etc., from bursting. mark: great to speak to you could thanks for joining us today, talking about irrational despondency and exuberance, julie, bringing us back 20 years. julie: yes. still ahead, it has been a rough
julie: emerging markets have underperformed developed since the election. we talked about that with the head of ubs emerging-market strategy. >> invested rough since the u.s. election. we have underperformed the development -- developed markets by 900 basis points, 9%, if you like, since the u.s. election. most of the record in the week immediately after that. we argued it to investors that they should start thinking about rotating back to em. we still think that is the right call to make. the argument here is our view is it will be very hard for the new administration to really get the u.s. economy growing strongly in
the near term. the could be some disappointments there. we have not raised the u.s. gross -- growth forecast since election to 2.4%. marketanslates to a bond where the yields don't go up from here and the dollar that tends to weaken from here. all of those are decent liquidity conditions for emerging markets. it is not really a growth story and em. everyone has gotten carried away with the examined by the u.s. economy. too worried about the bond markets and to bullish about the dollar. >> you went there, the dollar. how critical is the weakening dollar to your approach? we have a piece on bloomberg today -- there is an optimistic view in the developed world bonanza much on emerging markets. -- but not so much on emerging markets. >> that is correct. it is a long-standing relationship with we do well when the dollar is weak, we do
badly when the dollar is strong. money tends to go towards emerging markets, risky assets in reverse when the dollar strengthens. our view is the dollar-euro goes of 2017.t the end currently at the moment the trend is a little bit against us . we think that will be the case because of the european current-account surplus. the long-term equilibrium value for dollar-euro is nearer to the 1.20 level. that is a critical part of our view on emerging markets. mark: the european closed is next. this is bloomberg. ♪
going to take you from new york to london, tipper lynn all in next hour. here is what we are watching today. hamperingnd italian -- rallying european stocks. eu's top court in favor of borrowing means spanish banks may have to give back billions of euros. julie: we will be speaking to the head of global asset allocation. we will get his thoughts on the european banking sector. germany has launched a manhunt for the perpetrator of a deadly a christmas on market. we will have the latest from berlin.